Siddiq had referred herself to the ministerial standards watchdog last week after allegations that she had lived in properties paid for by the Bangladeshi government.

The properties were alleged to be linked to her aunt, the former Bangladeshi prime minister Sheikh Hasina, who fled the country after her resignation last August.

Siddiq, whose roles include the City and anti-corruption minister, said when she referred herself to the watchdog last week: “I am clear that I have done nothing wrong. However, for the avoidance of doubt, I would like you to independently establish the facts about these matters.”

She is accused of owning multiple properties purchased by people linked to her aunt’s party, the Awami League, including a flat in King’s Cross flat that was bought for £195,000 in 2001, according to the Financial Times.

The Private Intermittent Securities and Capital Exchange System (PISCES) was proposed by chancellor Rachel Reeves during her Mansion House speech last month.

Under the proposals, the new platform would be developed using a ‘financial markets infrastructure sandbox’, which allows the regulator to test the design before finalising the permanent structure.

The Treasury is aiming to bring a statutory instrument before parliament by May 2025, which will provide the legal framework for the PISCES Sandbox.

The FCA said it expects to publish its final rules shortly after. The regulator is consulting on risk warnings for investors around PISCES.

See also: UK unemployment rates remains unchanged at 4.3%

Simon Walls, interim executive director of markets at the FCA, said: “Next year we will ring the bell on a new private stock market that could transform how private companies access funds and grow. It will offer investors more access and a greater confidence to invest in private companies and could act as a stepping stone to public markets for those firms. 

“We want to work with industry and ensure we have the right building blocks in place to support investment in growing companies.” 

Firms wishing to run a PISCES platform will have to apply to the regulator, and once approved will be able to run intermittent trading events.

Further information will be published in early 2025 for firms interested in running a PISCES platform. 

Tulip Siddiq, economic secretary to the Treasury, added: “PISCES will be an innovative new type of stock market for trading for private company shares and is a significant step forward in our reforms to capital markets. It will give investors the chance to get in on the ground floor of some of the most exciting companies and support the growth of those businesses.

“Today’s consultation marks a significant step towards delivery of the new market next year and sits alongside our wider programme of reforms to boost competitiveness and investment. That includes the FCA’s overhaul of the UK listing rules and the creation of pension megafunds which will unlock billions of pounds of potential investment in businesses.”

The data comes as bond yields hit their highest level since the financial crisis. However, in the past year, the market has shifted rapidly. While the Bloomberg Global Aggregate index fell 3.6% from the beginning of the year to its trough in May, it now has a year-to-date return of 0.82%.

Although gilt yields spiked following the Autumn Budget, they have now largely settled to levels from before the announcement. In 2024, the Bank of England made two rate cuts to reach an interest rate of 4.75%.

See also: UK inflation jumps to 2.3% for October

In the US, treasury yields also lowered as Scott Bessent was chosen as US Treasury Secretary. While the Federal Reserve has cut interest rates twice this year for a total of 75 basis points, worries of inflation under a Trump presidency have caused uncertainty on how cuts will continue in 2025.

In its 2025 outlook, Vanguard priced in a rate of 4% by the year’s end, and Goldman Sachs expects a terminal interest rate of 3.25% to 2.5% for the Trump administration.

Jeremy Leach, chief executive officer of Managing Partners Group, said: “Fixed income funds have seen increasing inflows recently and this new research shows that institutional investors and wealth managers are set to significantly increase allocations over the next 18 months.

“Particularly as we enter a period of high volatility, the benefits of diversification and a regular income means fixed income is an increasingly popular choice for institutional investors and wealth managers.”

Most investors believe their allocation to bonds will rise by 10% to 15% in the next 18 months, while near a quarter see allocations rising beyond this share. Just 10% of investors believe allocation will increase by 10% or less. Currently, just 17% of investors say they are overweight fixed income.

See also: Will bond yields stay higher for longer?

Reeves raised an extra £40bn in revenue for the government through tax rises and announced a £70bn increase in spending on public services and infrastructure in her first Budget.

But measures as bold as these will not be needed again, she told the Committee yesterday, stating that the government have “drawn a line under the chaos and instability of the last few years”.

See also: Autumn Budget 2024: Ten key takeaways

“We’ve drawn under that now,” Reeves said. “There’s been a reset that means our public finances are now on a firm footing and the trajectory of public spending is much more honest.

“So we’re never going to have to do a Budget like this again. This was a once in a Parliament reset so that we start on the right foot.”

Gilt yields rose in the wake of Reeve’s sizable Budget – although AJ Bell investment director Russ Mould said they have everywhere, suggesting there is “a wider issue at work” globally – so she reassured the Committee that such sizable tax hikes will not be repeated.

See also: Autumn Budget 2024: Capital gains tax hiked to 24% in ‘blow for investors’

“In terms of whether we’ll be doing something similar in the future – no,” Reeves said. “This was a Budget of reset.

“We’re not going to be coming back with more tax increases, or indeed more borrowing. We now need to live within the means we’ve set ourselves in the budget and those allocations of spending totals.”

Could Trump derail Reeve’s growth plan?

Reeve’s also unveiled the Office for Budget Responsibility (OBR) latest forecasts during last week’s Budget, which predict positive economic growth over the next few years, including a 2% increase to GDP in 2025, and another 1.8% in 2026.

But the election of Trump could spoil these figures, according to the National Institute of Economic and Social Research (NIESR), who said his 10% tariff on all US imports could halve UK GDP.

Reeves said she would negotiate with Trump ahead of his inauguration next year and was “confident those trade flows will continue under the new president,” but members of the Committee questioned whether it was “realistic to influence a president who is so set on a course that is so well defined”.

See also: How will Trump’s tariffs impact markets?

Reeves responded: “I think it is too early to start making changes to forecasts for our economy because of the election of a president in the United States, but I would say this – our trading relationship and economic relationship with the United States is absolutely crucial.

“The US are our single biggest trading partner. Trade between our two countries is around £311bn a year, so of course our relationship is crucial and our special relationship obviously goes much beyond trade for our security and defense.”

Industry spokespeople such as IBOSS CIO Chris Metcalfe said Trump’s isolationist levies against the rest of the globe could lead to a trade war that “further dismantles the globalization narrative,” but Reeves said she will do all she can to convince the new president of the importance of free trade.

“We’re not just a passive actor in this. It’s a trade relationship with the United States and we will make strong representations about the importance of free and open trade not just between ourselves and the United States, but globally,” Reeves added.

“I am optimistic about our ability to shape the global economic agenda as we have under successive government.”

This move will generate an extra £25bn in tax revenue, more than making up for the £22bn ‘black hole’ left by the previous government.

Labour pledged not to increase the NI paid by working people, yet some argued that taxing employers would still impact that demographic. While it has been promoted as putting more money in people’s pockets, Hymans Robertson’s head of DC corporate Hannah English said the move would “dramatically increase the costs for employers” and could in fact “drive behaviours that yet again can harm today’s working people”.

In an attempt to combat this, Reeves increased the employment allowance from £5,000 to £10,500, meaning 865,000 businesses will not pay any NI at all next year, with another one million paying the same or less as they did previously.

See also: Autumn Budget 2024: Capital gains tax hiked to 24% in ‘blow for investors’

Yet the higher rate of NI and lower threshold could have a more sizable impact on larger companies, encouraging them to pay their employees lower salaries, according to Lindsay James, investment strategist at Quilter Investors.

“This is a significant lever to pull, but comes with many risks,” she said. “Businesses may now scale back pay increases or hiring plans, which goes against the mission for growth.

“The Chancellor has tried to exempt very small businesses from this increase, but the vast majority of small and medium enterprises in the UK will be hit. Coupled with the hit on business relief, small companies may not appreciate the plans put in place by the Labour government.”

Under the new rules, the amount a business pays in NI on an employee earning £30,000 will increase by £865.80, boosting the total cost from £32,884.20 to £33,750, Quilter estimates.

See also: Autumn Budget 2024: Minimum wage increases 6.7% to £12.21 an hour

The move could also lower the government’s revenues from other taxes. Employers may restrict wages to mitigate costs, leading employees to pay less on their individual NI contributions and income tax, whereas those companies choosing to pay more could see the extra NI contributions biting into their profits, meaning they pay less corporation tax.

The previous Conservative government cut starting NI rates paid by workers from 12% to 8% in their last two statements, yet millions still pay more despite these this because tax thresholds have remained frozen while wage growth has increased.

A draft Statutory Instrument published earlier this week (7 October) absolves investment trusts from producing KIDs and from publishing ongoing costs, as required by open-ended funds.

See also: Investment Association updates executive pay guidelines

Previously, closed-ended funds were required to produce KIDs in the same way that open-ended funds are. However, this forced investment trusts to effectively ‘double-count’ their costs as shares are already bought at market price on the stockmarket.

The AIC said the draft explicitly excludes VCTs despite previous assurances from the Treasury they would be included.

Richard Stone (pictured), chief executive of the AIC, said the association was “surprised and disappointed” to learn that VCTs were excluded from the legislation.

“It is now widely accepted that cost disclosures mandated by PRIIPs and MiFID are misleading – and they are misleading for VCTs as well as for investment trusts. There is no logical basis on which they have been singled out for exclusion from this exemption.

“We are engaging with the Treasury to understand why this has happened and will be pressing for the legislation to be amended to include VCTs, which have such an important role in backing up-and-coming UK companies.”

If UK consumers aren’t feeling the benefits of the bull run, it might be because global markets are more concentrated than they’ve been in decades. The so-called ‘magnificent seven’ of Microsoft, Apple, Nvidia, Alphabet (Google), Amazon, Tesla and Meta drove the gains for the MSCI ACWI in 2023, and continue to dominate in 2024. The success of a US chipmaker doesn’t trickle down into UK households the way it does when a local company is flying high.

This disconnect between the fortunes of the biggest companies and the realities of day-to-day life is one reason why governments around the world are taking an increasingly interventionist stance in their economies and markets. With the global rise in geopolitical tensions and onshoring in the wake of Covid also contributory factors, economic nationalism is back on the cards – and the UK is no exception.

See also: Dynamic Planner’s Williams: The psychology behind investing and risk

Starting with the post-Brexit Memorandum of Understanding between the Treasury, the Bank of England and the Financial Conduct Authority, and on through the Edinburgh Reforms to the most recent budget, the government has reiterated its commitment to using the second-largest capital market and investment industry in the world to drive growth in the UK economy.

The British ISA, announced in the budget but on hold until after the election, is intended to incentivise consumers to support the domestic market by allowing them to invest up to £5,000 tax-free in UK companies, on top of the existing £20,000 limit for stocks and shares ISAs. Under the Mansion House Compact, the UK’s largest DC pension providers have committed to allocate 5% of assets in their default funds to unlisted UK equities by 2030, supporting high-growth smaller companies and driving investment in infrastructure.

And the proposed Pisces (Private Intermittent Securities and Capital Exchange System) market will facilitate this by enabling the secondary trading of existing shares in private companies, opening up private markets to a wider range of investors.

One way to look at these measures is that a broader definition of good outcomes is emerging: one in which good consumer outcomes don’t only come from individual wealth, but from living in a prosperous society.

Read the rest of this article in the June issue of Portfolio Adviser magazine

Calls to revamp, or in some cases scrap, the concept of a British ISA come a week after Labour also committed to implementing the new tax-free wrapper. Which, under current guidelines, will allow investors who have used their maximum £20,000 tax-free ISA allowance to invest up to a further £5,000 in UK equities.

According to the latest statistics from the UK Government, 7% of ISA users – equating to 1.6 million people – typically use up their maximum £20,000 allowance. Providing this percentage stays the same, and every user were to invest the maximum £5,000 allowances into UK companies, this would inject £8bn into the UK stockmarket. According to data from Statista, the market capitalisation of the London Stock Exchange stands at £3.5trn as at the end of last year.

Steven Cameron, pensions director at Aegon said: “The UK ISA, as proposed in the HM Treasury consultation, is unlikely to deliver any significant boost to investment in UK businesses and will also fail to have widespread appeal with consumers.

“With the Treasury unlikely to review responses ahead of the Election, we hope whoever is in power on 5^th July will be open to exploring alternatives.”

While he understands the desire to encourage greater investment from UK retail investors into the economy, Cameron argued that a majority of UK companies’ underlying revenue is generated overseas, so investing in UK stocks “isn’t necessarily the same as investing in the UK”.

“Furthermore, we do not see the UK ISA as having widespread appeal,” he continued. “Its target market will be the small proportion of retail investors who regularly max out their current ISA allowance in stocks and shares ISAs and who are particularly attracted to UK investments.

“There may be alternative approaches which would attract a wider range of UK retail investors to ‘buy British’ such as requiring all retail funds and products to provide clear upfront disclosures of the proportion of UK investments held.”

See also: Platforms call for UK government to resist launching ‘retrograde’ British ISAs

Therefore, Cameron said Aegon “urge[s] HM Treasury to consider fully how the new product will fit with FCA Consumer Duty requirements”.

“This includes designing a product for a specific target market and avoiding foreseeable harm, which could easily be caused if customers were allowed to transfer general ISAs into the UK ISA and then be ‘stuck’ with no ability to transfer back.

“It also requires firms to ensure fair value, making it important to avoid creating costly new monitoring obligations on any party.”

William Marsters, senior sales trader at Saxo UK, agreed the current British ISA plans will do little to inject significant capital into the UK economy.

He said: “Regardless of how positive the intentions are, the British ISA does seem to fall short as effective. Less than 10% of ISA holders max out their annual allowance, so an extra £5,000 is unlikely to be widely utilised. Plus, it is estimated only 42% of the UK population have an ISA, compared to circa 85% who have private pensions. The government could get more bang for their buck if their efforts were focused there.”

Consumer Duty concerns

Tom Selby, director of public policy at AJ Bell, goes as far as to say current British ISA proposals “risk causing more harm than good and damaging the successful ISA brand”.

“Our research shows that when presented with the choice of a British ISA or a Stocks and Shares ISA, almost a third of potential investors would opt for the British ISA for their first subscription – despite the fact they could access identical investments and more besides for the same price in a Stocks and Shares ISA,” he pointed out. “This would be a poor consumer outcome and means firms would almost certainly need to wrap any British ISA in risk warnings to comply with the FCA’s Consumer Duty rules.

“As investors tend to naturally favour UK investments anyway, it would be much simpler to increase the overall ISA allowance to £25,000, a move which would likely achieve similar results to a British ISA but without the extra complexity.”

In addition, Selby said other hurdles include the fact that impact on capital markets will be “extremely limited”, that there are complexities surrounding whether the new wrapper will allow for collective vehicles such as trusts and funds, and questions as to whether customers would be able to transfer out of a British ISA.

See also: PA ANALYSIS: Would a BRISA be a silver bullet for UK equities?

He explained: “Savers could, for example, simply max out their British ISA subscription and then transfer their funds to a Stocks and Shares ISA, therefore benefiting from a £25,000 overall subscription limit without ever having to expose a certain amount of their funds to UK investments.

“It is therefore hard to conceive of a situation where transfers out of a British ISA are allowed.”

Will Labour give the British ISA a facelift?

Rachael Griffin, tax and financial planning expert at Quilter, said should Labour come to power after the elections come 5 July, the party has an opportunity to “drastically improve” current proposals.

“The ISA is a simple idea, a tax efficient place to grow your wealth. However, with various additions over the years it has now become a confusing area of personal finance. Should it win the election, Labour must use those principles of simplicity when designing the British ISA,” she explained.

“Current proposals run the risk of consumer confusion or poor outcomes – for example, limiting the ability to transfer out of a British ISA to a different ISA may not be fully understood at the time of opening.

“Furthermore, the investment universe of a British ISA will be naturally limited, but more can be done to appeal to a wider set of investors, such as including cash and fixed income investments or lowering the minimum UK equity requirement. The closer the British ISA is aligned to the current Stocks and Shares ISA when it comes to investment vehicles permitted, the better.”

She added that ultimately, “so few people use their total ISA allowance”, that current proposals are “unlikely to scratch the surface” when it comes to boosting the beleaguered UK stockmarket.

“The reality is, the UK has a cash savings problem and too much money is sat in low-yielding cash ISAs, doing very little to help them or the economy. Finding ways to get that money invested for the long-term would be far more beneficial.”

What are the solutions?

If the British ISA goes ahead as planned, investors agree there are ways in which to improve current plans.

Aegon’s Cameron said: “If implemented, we generally favour keeping the rules as aligned as possible with other forms of ISA, to avoid going against the aims of simplifying the wider ISA regime. While a ban on transferring from a UK ISA to a general ISA is essential to avoid abusing the additional £5000 allowance, we need to avoid unnecessary complexities elsewhere, such as special treatment of cash holdings.”

See also: Spring Budget 2024: British Isa announcement receives mixed reactions

Quilter’s Griffin agreed simplicity is key, adding: “It is important simplicity and attractiveness of the idea are put first. The British ISA’s success hinges on its ability to serve the needs of a diverse investor base. The more people we get investing, both in the UK and more generally, the more the economy will naturally come to benefit.”   

Despite widespread scepticism, Premier Miton’s CEO Mike O’Shea “broadly welcomes” the UK government’s proposals for the British ISA, as well as the Labour Party’s decision to back it.

“In our consultation response, we’ve called on HM Treasury to keep the proposals simple and focused on the core policy objective: capitalising UK companies,” he epxplained. “With these guiding principles, the UK ISA will be attractive and accessible to UK investors and an efficient flow for capital into UK companies.”

The association has lobbied for trusts to be removed from the CCI regime, arguing it is the quickest way to resolve the issue of cost disclosure for investment companies.

Last week, The House of Lords Financial Services Regulation Committee criticised the FCA’s application of retained EU regulation requiring investment trusts to report their costs in the same format as open-ended funds.

According to the committee, current disclosure requirements fail to recognise the role of listed company shares as the value of the financial instrument invested in, and indeed the mechanism creating investment permanence.

See also: £34m Ashoka WhiteOak Emerging Markets Trust proposes Asia Dragon merger

“It’s clear that the issues around investment company cost disclosure are harming the industry and putting off existing and potential investors,” said Richard Stone (pictured), AIC chief executive.

“The Treasury has the power to resolve these issues by removing investment companies from the scope of regulated cost disclosure – returning to the position that we had before January 2018 when EU-derived legislation such as MiFID II and PRIIPs was introduced.”

He added: “Delaying this decision is damaging market confidence. Investors are receiving misleading information which may stop them buying shares which can deliver strong long-term performance.

“The current rules are hamstringing demand for the investment company sector which is a global leader, with the capacity to mobilise capital for UK infrastructure, renewable energy and businesses. We call on the Treasury to announce its decision urgently so we can move to the next step in the process of resolving the issues with cost disclosure.”

In a letter addressed to chief executive Nikhil Rathi, the committee said current disclosure requirements fail to recognise the role of listed company shares as the value of the financial instrument invested in, and indeed the mechanism creating investment permanence.

The committee claimed that retained Mifid (Markets in Financial Instruments Directive) and Priips (Packaged Retail Investment and Insurance-based Products) rules had led to a significant decrease in money invested in trusts, estimated at around £7bn that could be allocated to the UK economy.

See also: Gravis MD Bill MacLeod: Beneath the trust industry’s campaign for fairer cost disclosure

They also said the rules had led to the acquisition of UK real assets by foreign investors at significantly reduced prices.

Baroness Bowles (pictured), member of the House of Lords Financial Services Regulation Committee, said: “Since the first one was founded in 1868, investment trusts have become a British success story. They have given institutions and individuals an opportunity to invest in infrastructure, growth companies and renewable energy.

“This success is under threat by the FCA’s interpretation of EU-retained Mifid and Priips, which is not shared by any other country, and has created an unlevel playing field on an international level.

“Urgent steps are necessary to resolve the problems that have been created. The FCA’s forbearance statement, which was issued in November 2023, helped, but does not go far enough.

“A potential solution could lie in requiring Authorised Corporate Directors to enter zero into the appropriate column that is for ongoing fund charges, aligning with the practices of EU funds, rather than inputting figures that result in misleading disclosures.

 “It is ludicrous that directors and companies are being forced to make misleading statements to investors.”

See also: Could one spreadsheet column solve the cost disclosure crisis for trusts?

While this was £7.6bn less than the previous year, it did overshoot the Office for Budget Responsibility’s (OBR) forecast by £6.6bn.

This could throw a spanner in the works for Chancellor Jeremy Hunt, who likely wanted to win over voters before the next election by cutting taxes.

With a slimmer budget to do so, Quilter investment strategist Lindsay James warned that an attempt to cut taxes while government borrowing was above target could cause chaos.

“This serves as a reminder that the government must walk a fine line to avoid another deeper currency rout such as the one memorably triggered by Liz Truss’s government in 2022,” she said.

“As the election nears, the pressure remains for the Chancellor to not only manage some of these fast-growing costs but also ensure that the government has the income to pay the bills. The price of sterling will be one indicator of how successful he, or perhaps soon she, will be in this ongoing balancing act.”

See also: Woodford investors to press ahead with claim against Hargreaves Lansdown

Hunt already cut National Insurance in March’s Spring Budget, but he could announce further cuts in the Autumn statement when the election – which has yet to be announced – could be looming.

Danni Hewson, head of financial analysis at AJ Bell, agreed that the ONS’s latest readings indicated that the Chancellor does not have the “cushion he needs to deliver a voter pleasing pre-election tax cut”.

Hewson noted that much of the government’s borrowing last year came from wage increases for public sector workers who needed assistance amid the cost-of-living crisis.

However, many private sector employers also did the same, which boosted income tax payments to £24.6bn over the year.

Likewise, government income also benefitted from rising prices, which in turn upped revenues from VAT. These factors – including last year’s hike in corporation tax – helped offset some of that borrowing.

Nevertheless, Hewson said the Chancellor still had “little room for manoeuvre” when it comes to tax cuts.

“All of that doesn’t necessarily mean tax cuts are less likely, it just means that what comes next is likely to hurt more,” he added.

See also: Investors ditch gold despite soaring prices

While the move has been applauded, others are disappointed by the pace of change set out, with 10 January being given as the date for submissions to the FCA.

Key figures across the investment company industry have campaigned for several years for an overhaul to Cost Disclosure Regulation and for trusts to no longer be categorised as Alternative Investment Funds (AIFs) because, given regulation under the Alternative Investment Fund Managers Directive (AIFMD), they must disclose ongoing charges in their Key Investor Documents (KIDs) based on their underlying net asset values, despite the fact investors are purchasing their shares at price. This therefore makes their charges appear artificially more expensive than their open-ended counterparts. KID regulation falls under EU law Packaged Retail and Insurance-based Investment Products (PRIIPs) regulation.

Earlier this month, a Private Member’s Bill on overhauling the regulatory burden for trusts by Baroness Altmann was passed in the House of Lords. She also entered the ballot to ask a question in the House last week on cost disclosure regulation, which was successful. Her Bill was due to receive its first reading today.

See also: “‘The end is almost in sight’: Gravis’s William MacLeod and Baroness Altmann on cost disclosure breakthrough“

This year’s Autumn Statement confirmed that the Treasury has drafted a statutory instrument setting out how it will replace PRIPPs regulation with “a new framework tailored to the UK”.

In an accompanying policy note on the UK Retail Cost Disclosure Framework, the Treasury acknowledged that the investment company sector is “highly aligned with the government’s priority to promote long term, productive investment and that it is a key source of capital and liquidity to support economic growth”.

It added that the reforms outlined will “enable the FCA to reform cost disclosure in a holistic way; ensuring it is accurate, does not impact the competitiveness of firms and is not misleading to retail investors”. The note also stated that the FCA is “considering interim solutions to mitigate the impacts on the investment company sector in the short term, as the government acts to implement a long-term legislative solution to the issue”.

James Carthew, head of investment company research at QuotedData, said his reading of the statements made is that “the old inflexible and misleading EU rules will be swept away”.

“What isn’t yet clear is what will replace them. We see that: ‘The FCA will publish a consultation on their draft rules to replace the PRIIPs Regulation, and certain MiFID provisions related to cost disclosure, in due course’. It is also worth highlighting that ‘HM Treasury intends to legislate in 2024, subject to Parliamentary time’.

“Fingers crossed!”

Richard Stone, chief executive of the Association of Investment Companies (AIC), said the trade body “applauds the government’s announcement that powers will be handed to the FCA to deal with the pressing issue of cost disclosures”.

“It is vital that we create a level playing field for cost disclosure between investment companies and open-ended funds, so it is good to see the intention to bring UCITS funds within the same regime,” he said. “The new regime must give investors the information they need to make informed decisions without any bias against investment companies and we look forward to working with the government on this.”

He added that the publication of the draft statutory instrument is “welcome”, as is the Treasury’s intention to take a closer look at MiFID.

See also: “Calls for judicial review into FCA as investment trust sector faces extinction”

“We will be looking at the details of the draft legislation to ensure that the powers handed to the FCA are wide enough. Action needs to be taken swiftly, and given the length of the legislative processes it is also encouraging to hear that the FCA is considering interim action to help mitigate the problems in the short term.”

Reacting to the Autumn Statement, however, Baroness Altmann said the Government’s recognition of the need for reform is “welcome” but that it is “disappointing that there seems little sign of the required sense of urgency”.

“The Statutory Instrument (SI) wants to ensure retail investors are given the right information to enable properly informed investment decisions, but the present situation is so misleading and damaging that it should be addressed immediately,” she urged. “There is also huge emphasis on new funds being set up such as by the PPF and investment banks using the previously proposed LIFTS and LTAF structures, but there are ready made specialist vehicles which could help pension funds back such long term illiquid assets straight away and they currently trade at significant discounts to asset value, offering potentially attractive long-term value to pension holders.

“This SI would remove the huge self-inflicted damage of misleading charges disclosure which has driven so many investors away and the sooner this happens the better. It is not yet clear whether this SI will apply to underlying individual funds or not. I welcome this initiative and look forward to reviewing the proposed wording and scope at the earliest opportunity. This situation really deserves rapid intervention.”

Richard Parfect, portfolio manager at Momentum Global Investment Management, concurred that the acknowledgement from the government is “welcome”. He added that handing the matter over to the FCA “probably makes sense, so long as they engage with the industry participants who have brought this to their attention to ensure any solution is effective on the ground”.

He added that, while he is pleased that the FCA will set out further detail on their proposed rules for a new retail cost disclosure framework in due course, he has concerns that the regulatory body is considering “interim solutions” to mitigate any short-term impacts on investment companies.

“This element is crucial as stakeholders don’t have the luxury of time and the Parliamentary timetable could be unhelpful; so we need a pragmatic interim measure that market participants such as ACDs can get hold of and restore sanity to the “cost reporting” on the funds they administer,” he warned.

William MacLeod, managing director at Gravis, said: “The reference to these Statutory Instruments is both welcome and hugely significant. A number of market participants have received an email from HM Treasury this afternoon thanking us for our input and reiterating the government’s position. It is reassuring that action will be taken; however, the government cannot afford to delay the matter further.

“The Private Members Bill presented by Baroness Altmann which has its first reading in the House of Lords today goes further and covers AIFMD as well as MiFID and PRIIPs and could in theory be adopted to accelerate matters, restoring order to the market and bring the current confusion to an end.

“The addition of repealing AIFMD legislation, inaccurately applied to investment companies, has been very costly and a significant impediment to market efficiency, requiring brokers to hold ever increasing levels of regulatory capital in order to trade in these companies, managers to pay AIF fees amounting to £200m-£400m over the last 10 years and has doubled up the regulatory oversight, but has offered no additional investor protection.

He added: “Gravis, along with a number of market participants, will continue to press the Government to reach a resolution as soon as possible.”

Ben Conway, head of fund management at Hawksmoor, agreed there is “still lots to do”, although he hopes Baroness Altmann’s Private Member’s Bill will “raise the profile” of what the investment company industry is trying to achieve.

“I agree a SI would be far quicker and I’d really like to see The Treasury adopt that approach,” he told Portfolio Adviser. “We need a change to legislation that allows for a regulatory framework that recognises that investment companies have characteristics of both listed operating companies and unlisted funds.

“This should allow for appropriate disclosure of investment company ongoing costs but for these costs not to be presented as, or treated as, product costs in the same way OCFs of funds rightly are. Disclose, don’t double count.

“Today’s news is a step in the right direction, but the urgency of the situation needs to be recognised.”